PPA (Power Purchase Agreement)
A long-term contract between an electricity generator (or storage operator) and a buyer — typically a utility, corporation, or trader — for the purchase of energy at an agreed price or pricing formula. Structures vary from fixed-price to indexed, and from physical delivery to financial settlement.
In energy storage
For BESS, PPAs take different forms than for generation assets — common structures include tolling agreements (the offtaker pays a fixed fee for the right to dispatch the battery) and floor-price contracts (the RTM provider guarantees a minimum revenue in exchange for a larger share of the upside). Pure fixed-price PPAs are less common for standalone BESS because revenue depends on volatile market spreads rather than predictable energy output.